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Here is a tweet from Ezra Klein:


Here is the Vox piece he is referring to. Maybe a line-by-line trampse through the article would be fun, but this one in particular stuck out:

The easiest way to eliminate Medicaid’s marginal tax rates would be to adopt single-payer health care. If you get the exact same health care if you make more money, the marginal tax rate imposed by a phaseout evaporates

The reason this is brought up is that the author quite correctly understands that one of the difficulties with our current anti-poverty “system” is that it imposes large marginal tax rates on working since the programs phase out as your income increases. This is almost impossible to do away with if you want to target programs based on income. Now, there are all kinds of clever and useful ways to deal with this issue, conditional on wanting to do something about poverty, but read the above quote again – the easiest way to eliminate the high implicit tax rates would be to adopt single-payer health care. Now, it’s no surprise that on a site such as Vox that this is the view. But this sort of argument is akin to me talking about the religious wars in America and saying, “Well, the easiest way to have the evangelical Christians accept gay marriage is to have them stop believing in God.” As a mathematical matter these may in fact be true, but the choice of “easiest” is just flat out wrong.

You know what else is an easy way to eliminate Medicaid’s marginal tax rates? Eliminate Medicaid. And that is no less serious a point than the one made above.

Again, there is much in the article to discuss, here is one more real howler:

There’s a lot the government can’t do. It can’t force poor people into marriages, for example. It can’t singlehandedly reverse decades of technology and globalization-driven trends in the labor market. But it’s pretty good at taking rich and middle-class people’s money and giving it to poor people.

So our author here makes two incredibly wrong points. Maybe these aren’t “facts” so Klein’s tweet isn’t technically hypocritical, but it’s close. Decades of technology and globalization are undoubtedly good for people, all people, over the long haul. So the implication that if the government were powerful enough and wizardly enough to undo the technological and globalization changes of the last half century, that it should actually do it, and that would improve the lives of the poor, is, to put it nicely, misguided. But it reads well and plays well to their audience. Second, he claims that the government is good at taking rich and middle-class people’s money and giving it to poor people. Actually, no. It’s good at taking rich and middle class people’s money and giving it to other rich and middle class people – particularly well-connected cronies. That’s perhaps THE problem when talking about poverty.

Two last things:

First, does this picture look like one where poverty is being fought effectively?

Poverty rates, 1967-2012, using Supplemental Poverty Measure data from Columbia

Second, I often make the point that the author makes when he posted that image above – that if we include the dollars and resources that our antipoverty programs provide to the poor, then the numbers of measured poor fall substantially. But, think for a minute about this. As a technical matter, if antipoverty spending helps people in poverty, and that spending increases year after year, is it doing the job? Or maybe to put it another way, is it proper to look at post-tax and post-transfer income as a way to evaluate “poverty?” Isn’t the entire point of any of these programs to help everyone get rich? The right question to ask, in my view, is how successful have government programs been at reducing the “natural” rate of poverty, so to speak? Are there fewer or more people in need of assistance today? Are opportunities to earn a good living better today? All of the semantics about the numbers abstracts from these and other important questions.

UPDATE: Scott Sumner patiently takes the time to make my point.

2 Responses to “Vox Likes Talking About Poverty …”

  1. Trapper_John says:

    I will give kudos to Mr. Klein on one point: I suspected that he (along with the majority of the Left) used pre-tax/transfer numbers when talking about income inequality, so I looked it up. He has a whole article entitled, “Inequality Isn’t ‘The Defining Challenge of our Time.'” Still, I wonder how many of his readers see no disconnect between banging the drum on inequality using pre-tax/transfer numbers and then using post-tax/transfer numbers to show anti-poverty programs are “working”.

    I would argue that the point of these programs is not to reduce poverty (or help everyone become rich) but rather to ease the collective conscience of our nation. The rhetorical flourish/presumed checkmate: “How can we have people driving Rolls Royces [or doing whatever rich people do these days] while there are other people starving in the street?” While this point holds less water in current times (poor in the US are the fattest people in the world), I still think that argument is why these programs exist. Does anybody believe these programs lead to people getting more jobs or getting off government assistance? How economically illiterate do you have to be to believe that subsidizing something will produce less of it? Nevermind.

  2. wintercow20 says:

    Nice point about the inequality data. Given the way the wealthy are taxed as well, their pre-tax income is going to higher than a world where the tax burden was lower, not to mention obviously higher than their post-tax income already.

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